Wall Street has a new favourite customer: Alibaba.

The Chinese e-commerce company has emerged as this year’s biggest source of fees for banks working on capital-markets deals. After its $25 billion initial public offering in September, the largest in history, the Chinese Internet company on Thursday sold $8 billion in bonds, one of the largest corporate-bond deals of the year.

While fees weren’t disclosed, the banks coordinating the sale—led by Morgan Stanley , with assistance from Citigroup, Deutsche Bank, JP Morgan and seven others—reaped millions of dollars for their efforts in finding buyers for the bonds.

Morgan Stanley and the other banks coordinating the sale are lenders to Alibaba under an $8 billion credit facility that has already been used. Alibaba plans to use proceeds from the bond sale to help pay off that $8 billion loan, which carries variable interest rates tied to the overall market. The bonds sold Thursday mostly carry fixed rates, potentially giving the company savings over time should market rates rise.

When drugstore chain Walgreen completed an $8 billion bond sale this month, banks on the deal reaped nearly $40 million, according to a securities filing.

Banks have collected more than $35 billion in fees so far this year on new stock and bond offerings, according to data provider Dealogic, up from about $32 billion at this time last year. Alibaba is already the largest payer of underwriting fees to banks this year, dispensing $291 million to the arrangers of its September IPO, according to Dealogic.

Alibaba has eclipsed firms such as Canadian energy company Encana, French telecommunications firm Numericable and Japanese real-estate company Mitsui Fudosan to top the rankings of the most lucrative underwriting clients globally this year, according to Dealogic figures.

The underwriting boom alone won’t fill in the gaps for banks under pressure amid soft trading and low interest rates. Underwriting fees are just a fraction of the revenue generated by securities sales and trading, for example.

Related

In an unusual move, Alibaba insisted that there be no lead bank on its initial share offering. The company listed five banks on the deal in alphabetical order— Credit Suisse Group, Deutsche Bank, Goldman Sachs, JP Morgan and Morgan Stanley—to reflect their equal base fees for the deal, with a sixth lead bank, Citigroup, listed after them because it received a smaller base fee, people familiar with the deal have said.

Alibaba intended the arrangement to reward each of the banks for prior work with the company and to maintain future relationships, though some bankers were frustrated that the initial pay didn’t reflect different roles in the deal, the people said.

The $291 million IPO fee reflected a pay rate of 1.2%, which was slightly more than the 1.1% Facebook Inc. paid in its $16 billion IPO, completed in 2012. It was still far less than the typical 6% to 7% awarded in most IPOs.

Morgan Stanley began discussing the bond sale with Alibaba as many as 18 months before the IPO, people familiar with the deal said. The company chose to sell the bonds this week in part because investors had a chance to review Alibaba’s first quarterly earnings as a publicly traded company. Market conditions were good and the Thanksgiving holiday—when bond markets are closed—is coming up, the people said.

Investors said demand for the Chinese company’s debt was robust, underscoring the hefty appetite for income-generating investments at a time of uneven global growth and low interest rates. Alibaba received as much as $55 billion in orders for the debt, said people familiar with the deal, joining other technology companies such as Apple, Oracle and Cisco Systems in completing multibillion-dollar bond sales in 2014.

Strong demand sent yields lower. A five-year bond, for example, was initially offered to yield about 1.10 percentage points more than comparable Treasurys earlier in the week, but that figure fell to 0.95 percentage point on Thursday, for a yield of 2.582%. In total, Alibaba’s deal came in six parts, with maturities ranging from three to 20 years.

Kent White, director of investment-grade research at Thrivent Asset Management, which oversees about $92 billion, said his firm purchased some of the Alibaba bonds for mutual funds, citing the company’s strong earnings and dominant market position.

“My analyst liked it over eBay and Amazon,” White said.

The bonds yielded a little more than comparable companies. A 2019 bond from eBay Inc., for example, traded recently at a yield of 2.509%.

Investors weren’t surprised at the deal’s strong reception. The bond sale was “broadcast for some time, so people had time to prepare for it,” said Michael Hyman, head of investment-grade portfolio management at Invesco, which oversees about $241 billion in fixed-income investments. Hyman declined to say whether his firm bought the new bonds.